Digital Transformation | Hybrid Cloud | IoT

Friday, December 4, 2015

Building the Playbook for Digital Transformation in 2016

Does your CEO have a bold goal for 2016? Does the goal include the word ‘digital’ or ‘transformation’ in the description? Well, if so, they’re not alone in their quest for a superior IT-­enabled competitive advantage that positions their organization for the future.

Business technology investment related to digital transformation (DX) projects will constitute the majority of growth in IT­-related markets over the next five years, according to the latest IDC assessment.

"The disruptive impact of digital transformation is about to be felt in every industry as enterprises 'flip the switch' and massively scale up their DX initiatives to secure a leadership role in the DX economy," said Frank Gens, senior vice president and chief analyst at IDC. "In the next two years, two-thirds of Global 2000 CEOs will put DX at the center of their growth and profitability strategies. By the end of this decade, IDC predicts that the percentage of enterprises with advanced DX strategies and implementations will more than double."

IDC recently shared their analyst predictions for 2016, highlighting key information and communication technology (ICT) issues that will impact the organizations that have set a goal to digitally transform themselves over the next one to three years.

As part of a related IDC customer webinar series, senior IT leaders and Line­-of-­Business (LoB) executives were provided guidance for managing their digital transformation investment priorities and implementation strategies.

The Ten Predictions for Digital Transformation are:

By the end of 2017, two ­thirds of the CEOs of the G2000 will have digital transformation at the center of their corporate strategy.

By 2017, 60 percent of companies with a DX strategy will deem it too critical for any one functional area and create an independent corporate executive position to oversee the implementation.

By 2018, 80 percent of B2C companies will have created immersive, authentic omni-experiences for customers, partners, and employees; 60 percent of B2B­-centric companies will have done the same.

The top new investment areas through 2017 will be contextual understanding and automated next best action capabilities.

In 2016, 65 percent of large enterprises will have committed to become information-­based companies, shifting the organizational focus to relationships, people, and intangible capital.

By 2018, 75 percent of the G2000 will have deployed full, information-­based, and economic models or "digital twins" of their products/services, supply network, sales channels, and operations.

By 2020, 60 percent of the G2000 will have doubled their productivity by digitally transforming many processes from human-­based to software-­based delivery.

In 2016, the level of connectivity related to products, assets, and processes will increase 50 percent for all industry value chains.

The sharing economy will give rise to the networked free agent and skill­-based marketplaces, resulting in more than 10 percent of work being sourced in this fashion within mature economies by 2019.

By 2018, at least 20 percent of all workers will use automated assistance technologies to make decisions and get work done.

"Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets. Enabled by the 3rd Platform technologies of social, mobile, analytics, and cloud, digital transformation represents an opportunity for companies to redefine their customers' experience and achieve new levels of enterprise productivity, said Bob Parker, research vice president at IDC.

If you think that IDC is merely profiling those smaller, nimble organizations that are out on the fringes of global commerce, then you would be mistaken. Consider the recent introduction of GE Digital​, a transformative move that brings together all of the digital capabilities from across the company into one organization. Now, this goal is bold.

“As GE transforms itself to become the world’s premier digital industrial company, this will provide GE’s customers with the best industrial solutions and the software needed to solve real world problems. It will make GE a digital show site and grow our software and analytics enterprise from $6 billion in 2015 to a top 10 software company by 2020,” said Jeffrey Immelt, Chairman and CEO of GE.

In summary, the DX economy will take its toll on the IT industry itself. By 2020, IDC predicts that nearly a third of today's IT suppliers will be acquired, merged, downsized, or significantly repositioned. In this environment, CIOs will have to constantly assess the solutions offered by their suppliers and be prepared to re-build their playbook in 2016 and beyond.